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Last Update: July 2014

Commentary on the recent development of price indices

June has been characterized – for the second consecutive month – by downward adjustments in all three oilcrop complex price indices. The strongest decrease occurred in the price index for oilmeals/cakes,  which dropped by 11 points (or 4.3 percent) to a 14-months low. The vegetable oils index lost 6 points (or 3.2 percent), and the oilseed index fell 4 points (or 2.1 percent). In historical terms, the indices for oilseeds and oils continued to fare below the corresponding values of the last two years, whereas the oilmeal index remained historically high.

The latest fall in oilseed and oilmeal values was driven by developments in the global markets for soybean, sunflower and rapeseed. With the arrival of South America’s large soy crop, the prolonged tightness in global soybean supplies has finally come to an end, which, together with unexpected upward revisions in US stock positions, has led to a softening in world soybean prices. First forecasts of a bumper global soybean crop in 2014/15, and especially the prospect of another record-breaking harvest in the United States (which would facilitate a replenishment in US stocks), also contributed to the downward trend in prices. Regarding rapeseed, world prices continued to weaken as the EU’s new (2014/15) crop – tentatively forecast at a record level – is expected to enter the market soon. Also weighing on prices were favourable prospects for Canada’s forthcoming rapeseed harvest. As to sunflower, ample global availabilities from the 2013/14 crop and expectations of a good harvest in 2014/15 are keeping prices at historically low levels.

The additional setback in FAO’s vegetable oil price index was mostly driven by developments in the palm oil market, although lower seed oil values (mirroring trends in the corresponding seed markets) also pulled in the same direction. The lasting slide in palm oil values mainly reflects continued strong production in Southeast Asia, which, combined with sluggish global import demand, has lead to a build-up in stocks. Interestingly, although declining on a month-to-month basis, both soy and palm oil appreciated quite substantially towards the end of June. The unexpected rebound in edible oil values can be attributed to a spike in petroleum prices, which stimulated demand for vegetable oils as biodiesel feedstock. It appears that the palm oil market also reacted to reports predicting lower than usual rainfall in the coming months in Southeast Asia, which could threaten palm oil yields.

Components of the oilseeds price index: Soybeans, US, cif Rotterdam; Copra Phil./Indo., cif NW Eur. port; Rapeseed, Europe, 00, cif Hamburg; Linseed, Canada, No.1, cif NW Eur. port; Sunseed, EU, cif Rotterdam (please note that sunseed has been added to the index only in January 1976).

Components of the oils/fats price index: Soybean oil, Dutch , fob ex-mill; Sun oil, EU, fob NW Eur. port; Rape oil, Dutch, fob ex-mill; Groundnut oil, any origin, cif Rotterdam; Cotton oil, US, PBSY, fob Gulf; Coconut oil, Phil./Indo., cif Rotterdam; Palmkernel oil, Mal./Indo., cif Rotterdam; Palm oil crude, cif NW Eur. port; Linseed oil, any origin, ex-tank, Rotterdam; Castor oil, ex-tank Rotterdam.

Components of the meals/cakes price index: Soy meal, 44/45%, fob ex-mill Hamburg; Sun pell., 37/38%, Arg., cif Rotterdam; Rape meal, 34%, fob ex-mill Hamburg; Copra exp. pell., Phil., domestic; Palmkernel  exp., 21/23%, cif Rotterdam.